Well actually it’s a rubbish report on broadband in general but it’s a classic effort nonetheless. It names and shames, it’s timely and it’s not holding back. I suspect it’s simply a vehicle to get a few names in the news, but it could have a darker side. I don’t know.
It’s clearly negative overall and will by its nature and timing get attention. People will jump on board and say “I told you so”, just like they’ve done with global climate change, the Y2K bug and the Ozone hole. But of course the yea-sayers were actually right about both the ozone issue as well as the year 2000 problem, so they may well be right about climate change, too. And unlike climate change we actually did something about ozone depletion and Y2K remediation. Indeed so successful were we at fixing these problems that loony revisionists can now sit back and say “there was no problem after all”. Well there was, folks.
So what’s wrong with fatter pipes and faster broadband? Well read this and the original report and come back.
Done? OK, let’s try some quotes and pick it apart a little.
Firstly, I can’t be bothered with Peter Martin’s summary as it adds nothing and just focuses on the local political aspect (gosh, did Rudd pick his figures carefully? Shock!) rather than looking at whether or not the report stacks up overall.
Instead I’ll just look at the “working paper” by Kenny and Kenny.
So who are Kenny and Kenny? A pair of brothers, apparently. Robert Kenny calls himself a telecoms and media consultant with “Communications Chambers”. Whatever that is. His brother Charles Kenny is a ‘Senior Fellow at the Center for Global Development’ and a ‘Schwartz Fellow at the New America Foundation’. Now a brief search fails to find “Communications Chambers”, so it may be new or keeps a low profile. That’s a worry, either way.
At least the Center for Global Development is easy to find and confirms Charles Kenny to be a real person with more than a little cred in the area of technology and global development. Similarly the New America Foundation exists and Charles again appears to stack up. A bit reassuring.
Along the way I found that Stuart Corner describes Robert Kenny as a member of “Communications Chambers a UK based “association of leading experts in the fields of telecoms, media and technology [that] advise on issues of strategy, policy and regulation.” He has previously held senior roles in strategy and/or M&A for Hongkong Telecom, Reach and Level 3 and was a founder of IncubASIA, a Hong Kong based venture capital firm investing in online businesses. His brother Charles is a development economist working in Washington DC.”
So that’s the background as I see it.
On with the show.
The working paper itself is called “Superfast: Is It Really Worth a Subsidy?”. So immediately the authors are making a judgement by labelling the enabling fibre technology “superfast“, rather than objectively calling it fibre or fibre to the home or optic fibre or a host of alternatives that simply describe an enabling technology that equates to a fatter data pipe to homes, hospitals and businesses, etc etc. It’s not even simply fast, it’s super-fast, like a jet or a fast car. OTOH I have no problem with questioning the subsidy-side of things.
Having said that, in the local Aussie case of the NBN the business case suggests that whilst the taxpayer will stump up to kick off it stands a good chance of being self-sustaining over the longer term. And I tend to believe that in essence it will at least pay its way. So ‘subsidy’ is actually moot.
Now the executive summary basically calls into question the whole point of going beyond “basic broadband” and poo-poos the idea that going ‘faster’ means anything at all, based on existing data. From this summary, we know that broadband is better than dial up, but they ask why should we expect ‘better broadband’ to be better again? Why should we assume that we will even use it? Why indeed assume we’ll use it for such things as home working when this will necessitate a change in our social behaviour?
All good questions, but they have equally obvious answers too. Why wouldn’t we use it when we’ve used other improved networks, be they roads, rail or broadband? Haven’t we seen a shift to home working and greater remote accessibility to work, government services, medical records and so on already, and why wouldn’t we expect that to grow? And if we do nothing but add users to existing broadband will it not simply slow that service down? Can we afford to risk doing nothing?
Another point raised is that competing technologies may overtake optic fibre – which is indeed always possible. But optic fibre has been the king of this arena since at least the 1980s – and has withstood every challenge so far. How long do we wait?
I particularly note this dot-point in the executive summary: “Frequently business or government applications, such as remote medical imaging, are used to make the case for FTTH. But these applications require fiber to certain major buildings, not to entire residential neighborhoods (and these buildings often have high speed connections already)”.
Which seems to misunderstand the whole argument for fibre to the home. Hospitals and government departments may well have big pipes already but we are talking about changing the way we do things, not keeping the status quo. The question is how do we get high-speed medical imaging into local doctors surgeries, not just the big city hospitals? How do we get it into the homes of the ill and the elderly in suburbia, as well as to remote or even regional locations where doctors are scattered thinly and patients face hundreds of kilometres of travel? Will enhanced copper or wireless cut the mustard now, let alone in 30 years time?
They also make an unsupported statement in the summary: “A decade ago telcos wasted billions of shareholders’ money on telecoms infrastructure that was well ahead of its time – governments are now in danger of doing the same with taxpayers’ money.”
That may well be true – they don’t clearly reference the comment so I can’t check exactly what they mean – but presumably the competitive commercial pressure to roll out the cable or wireless technologies that drove this “wasted” investment was an enabler for the current broadband, pay-TV and mobile cellular phone networks that we use today.
So while it may arguably have been “ahead of its time”, was it “wasted”? If it resulted in unnecessary duplication, maybe. If it could have been spent more wisely on other opportunities, perhaps. But don’t say it’s fact unless you can prove it. And why would government investment in FTTH broadband be considered the same sort of “waste” as duplicated, rushed investment in premature, risky technologies, when fibre is far from the technological risk that is alluded to and hardly an unproven technology?
The introduction really takes the cake, comparing Concorde with FTTH. Flashy, risky, fast – and presumably doomed. To quote: “All else equal, faster is better – surely. But faster technologies don’t always triumph; think of passenger hovercraft, maglev trains, and suspersonic airliners.”
Well it’s not equal at all. Comparing individual transportation devices like hovercrafts and Concorde with a network of fibre optic cable is misleading and at best quite bizarre. Such individual devices are fixed-size objects of great risk and complexity that have little in common with a well-proven fibre technology roll-out. It’s not apples with apples, is it?
The report goes on: “These technologies didn’t fail because they weren’t superior, but because the demand wasn’t there, or was insufficient to justify cost. Concorde (if it hadn’t retired) would still be the fastest passenger aircraft today, having first flown in 1969. At the time it was being developed, supersonic passenger flight was expected to become ubiquitous. It turned out that the incremental benefits of speed to most customers was not worth the extra cost.”
Well that’s also quite unsupported. There are many who believe that Concorde, for one, was politically as well as technically hobbled. It was noisy, dirty and strangled (possibly quite rightly) by legislation. It was often not allowed to supersonically overfly populated areas due to the sonic boom generated, thus robbing it of key markets. It was too small and there was insufficient political will to develop the product, especially given the fuel cost spike in the 1970s and the concomitant US push into larger airframes and lower per-seat-mile costs. It simply isn’t as simple as faster is always better or the consumer simply not being willing to pay a premium. It got political and it stayed like that right to the bitter, cruel end. And it has nothing to do with laying fibre.
It’s a bad start. The authors go on to question the numbers, the past impact of existing broadband and the likelihood of a poor return for the investment. They have (to their credit) bothered to reference many of these latter statements and I have no real argument against contrarian views. But I am a bit bothered that they can be so negative about what seems a reasonable infrastructure investment. Why? What happens if we do nothing? Clearly there’s an opportunity cost to everything, even not investing carries a risk. But to put a negative spin on such a positive enabler seems misplaced, at least to me.
FTTH is not a risky, cutting edge technology at all; it’s upgradeable, so it can handle even greater needs; and it is an enabler for proposals and ideas that have been “out there” for at least 20 years but have simply lacked the bandwidth to get going. Sure you can question the likelihood of individual ideas actually gaining traction, but history also shows that when we build an enabling network, be it the Internet or a physical transport system, it gets used – and often in unexpected ways. It also is a multiplier – what is enabled here will likely percolate and expand over there. I can’t put sensible numbers around it, they would be a guess.
If you do want numbers that stack up, build the network and take measurements before and after.
Yes, it carries a risk – who knows what comes next? But when we have aging copper in the ground that will in coming years need to be repaired, replaced or simply disconnected, why not seize the opportunity to swap over to something proven and better? Especially when wireless hasn’t yet shown the coverage or capacity needed.
Interestingly – and predictably – Opposition Leader Tony Abbott jumped on this report and said that “I certainly want my computer to work effectively, but I’m far from convinced that the people of western Sydney, for instance, think that putting a wire into their house so that their computer is chained to the wall, so to speak, is more important than fixing up the transport mess.”
Tony obviously hasn’t heard of WiFi in the home, so how good is his analysis?
Want more? I’m out of action or simply can’t be bothered now, but John Quiggin has a bit of a discussion going and David Havyatt has an interesting perspective on it as well.